New prospects for insurers in China
New prospects for insurers in China
SHANGHAI (Reuter): China raised the prospect of opening more cities to foreign insurers yesterday after the American International Group (AIG) pulled off another coup by getting the go-ahead to trailblaze in Guangzhou.
The official China Daily quoted an official of the People's Bank of China, the country's central bank, as saying a move to open more cities was under consideration along with plans to allow a greater number of foreign insurers.
Yang Wenyou also said Beijing was reviewing whether to reduce the waiting time to two years from three for overseas insurance groups to apply for a full branch license after setting up a representative office.
On Tuesday, AIG said it had been told by the central bank it would be given approval to become the first foreign company to set up in the southern boom city of Guangzhou.
AIG will be licensed for life and non-life insurance business in Guangzhou, capital of Guangdong province, and its surrounding counties, which are pockets of wealth where mainly Hong Kong manufacturers have invested billions of dollars.
In 1992, the company become the first foreign insurer permitted back into China when it established a branch in Shanghai, the city where it began in 1920.
That breakthrough was the result of years of personal diplomacy by AIG chairman Maurice Greenberg, who has cultivated friendships with top Chinese leaders.
Greenberg last week was named a "senior economic advisor" to the Beijing city government.
His coup in blazing a trail for foreign insurers outside Shanghai, where AIG has been joined by Japan's Tokio Marine and Fire Insurance Co, is all the more remarkable at a time when Sino-U.S. relations are on a downward spiral.
Shanghai-based Western insurance executives said they believed Beijing planned to open up cities to international insurers that are already open to overseas banks.
Foreign banks now operate in 13 coastal cities and approval has been given for 10 more cities, including Beijing.
"In the next 12 months more foreign insurance companies will be licensed in Shanghai," said Monica Dang, the Shanghai representative of British insurance broker Sedgwick.
She said Chinese officials "are paying more attention now to the industry".
The Shanghai manager of a leading Western insurance group said AIG's approval for Guangzhou "is a sign they are going to do something to open up the market".
He said the opening was being driven by the pace of economic development in China that created a pressing need for insurance among Western investors and Chinese companies requiring better coverage as a condition of bank financing.
"At the end of the day they have to open," he said.
Beijing is sending encouraging signals to foreign insurance companies after publishing a national insurance law that sets out for the first time a framework for the development of the domestic industry.
The law, set to take effect on October 1, offers no direction to foreign companies, who expect separate regulations governing their operations will emerge in the coming months.